VIDEO: Three questions investors should ask when reviewing board members
The composition and functioning of a board can be a powerful indicator of a company’s future success says expert Tim Parker of consultancy Two Brains.
He’s outlined a few key questions investors should consider when evaluating the strength of a company’s board.
First, he says investors should consider the way in which the board has been assembled.
“As well as providing corporate governance, the board should be a valuable strategic asset — challenging the strategy and supporting the CEO and other officers in decision-making.”
With that in mind, he says investors should ask themselves: Has a board been assembled to best achieve this?
“Or has it been put together simply to meet compliance requirements or provide and engagement mechanism for major investors or senior participants?”
Another question should focus on the diversity within the board.
“Does the board have true diversity, by which we mean diversity of thinking, not simply gender or experience?”
Next, he says investors should consider the background to the relationship between the Chair and CEO?
“And, as is often the case in a start-up, if the CEO is a strong-willed corporate entrepreneur, will he or she simply steamroll the board? Or conversely, will a major stakeholder demand a voice commensurate with their investment?”